RBI MPC Meeting 2024: CRR cuts to 4%, repo rate unchanged at 6.5%
At the last MPC meeting, a majority of 5 out of 6 members voted to keep the policy repo rate unchanged at 6.5%. They also unanimously agreed to shift the stance to 'neutral' and emphasized the need to align inflation durably with the target while supporting economic growth.
RBI MPC Meeting 2024: CRR cuts to 4%, repo rate unchanged at 6.5%
The Reserve Bank of India holds a Monetary Policy Committee meeting today. Despite GDP growth in the second quarter of FY25 slowing to a two-year low, the rate-setting Monetary Policy Committee (MPC) is likely to maintain the current repo rate. This decision comes as retail inflation exceeded the 6% tolerance level in October. The six-member MPC is prioritizing the reduction of retail inflation to the target rate of 4%.
MPC members are expected to hold firm on their stance, even in light of recent comments from several Union cabinet ministers and the Chief Economic Adviser advocating for lower interest rates.
At the last MPC meeting, a majority of 5 out of 6 members voted to keep the policy repo rate unchanged at 6.5%. They also unanimously agreed to shift the stance to 'neutral' and emphasized the need to align inflation durably with the target while supporting economic growth.
Additionally, the Cash Reserve Ratio (CRR) will be reduced from 4.5% to 4%, implemented in two phases of 25 basis points each, starting from the fortnight beginning December 14. Consequently, the Standing Deposit Facility (SDF) rate will remain at 6.25%, while the Marginal Standing Facility (MSF) rate and the Bank Rate will be held at 6.75%.
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The Reserve Bank of India (RBI) today proposed allowing small finance banks (SFBs) to offer pre-sanctioned credit lines through the unified payments interface (UPI) and will issue the necessary guidelines shortly.
The GDP growth projection for FY25 has been slashed to 6.6% from the earlier 7.2% indicating the effects of high food inflation.
Going ahead, high food inflation in the domestic market and geopolitical tensions in the Middle East and between Russia-Ukraine will continue to remain a huge concern which could further lead to a slowdown in trade activities of gems and jewelry. However, the continuation of a neutral stance by RBI to support growth is a much-needed step that indicates a low-rate regime in sight.
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